Pipeline to Arctic port mulled by Alberta government

The Alberta government is looking at yet another pipeline option to get its oil to market should the Keystone XL or Northern Gateway pipeline proposals not come to fruition.

Calgary consulting firmCanatec Associates International Ltd.has been hired by the province to study the feasibility of moving crude from the oilsands north to a port in the Northwest Territories.

It has been estimated $30 billion a year stays locked in Alberta's oilsands because there is no way to get it to market.

TransCanadas Keystone XL pipeline to the Texas Gulf Coaststill needs the approval of the U.S. State Departmentand President Barack Obama.

Its proposal toconvert an existing pipeline to pump bitumen eastwardto refineries in Quebec and New Brunswick is also controversial.

Meantime, Enbridge's pipeline proposalwest to Kitimatis meeting with fierce resistance in B.C. from environmentalists and aboriginal groups.

So the Alberta government is looking at another option to build a pipeline from the oilsands up the Mackenzie River Valley to a proposed deep-water port at Tuktoyaktuk, N.W.T.

From there it would be loaded onto oil tankers and head to Asian and European markets.

"Really it speaks to the importance that access to markets has," said Pembina Institute policy analyst Nathan Lemphers.

"The industry is facing an impending bottle neck of take-away capacity. They don't have the capacity to get their product to market because pipelines are harder to build than they have been in the past," he said.

But a northern route could be just as difficult to sell as the other pipeline options on the table, he added.

Northwest Territories Premier Bob McLeod has said he is interested in a northern pipeline.

McLeod recently completeda power-devolution deal with Ottawathat could make the project even more attractive for the N.W.T.

Doug Matthews, an Alberta energy writer who worked for the N.W.T. government on resource issues for 25 years, said the proposed pipeline would need to accommodate at least 500,000 barrels a day to be feasible.

"Such a line of course, and given that it would be shipping bitumen I would think primarily, is going to attract an awful lot of environmental opposition," he said.

But Matthews said most northerners, keen to develop their own natural resources, would be supportive.

"Theres no reason why N.W.T. resources couldnt link into that pipe," he said.

Getting the pipeline built would only be one part of the equation, Matthews said.

"The port itself is relatively undeveloped right now in terms of tankers. Its never been used for that other than barge loading and off-loading," he said.

"You would need some fairly significant dredging in order to allow the larger tankers to come in and load up, or run a pipe from the coastline farther offshore to the deeper waters," he said.

Technical and financial hurdles

According to Bob Page, director of the Enbridge Centre for Corporate Sustainability at the University of Calgarys Haskayne School of Business, building a pipeline on Arctic terrain presents enormous technical and financial challenges.

Moving viscous heavy crude oil requires a heated pipeline, he said.

"And the thermal shadow around that pipeline tends to melt the permafrost, so if you dont elevate it then youve got to do special design specifications," he said.

Getting around and sometimes under the powerful Mackenzie Riverwith its massive spring ice scourwould be another major hurdle, he said.

"You can do it technically, but it does add cost, and we have very high cost product to begin with that were trying to get to [the] world market. So the transportation cost becomes significant in terms of the overall competitive viability of it," he said.